Dual Class IPOs are Underpriced Less Severely

Posted: 3 Dec 2007  

Chad J. Zutter

University of Pittsburgh - Finance Group

Scott Smart

Indiana University - Kelley School of Business - Department of Finance

Multiple version iconThere are 3 versions of this paper

Abstract

We analyze a sample of dual and single class IPOs to investigate whether empirical estimates of underpricing determinants are consistent across alternative measures of firm size and alternative techniques intended to account for underwriter price stabilization efforts. We find that results from long-standing methods for estimating underpricing relations are generally robust to one's choice of size proxy and are consistent with estimates obtained from censored regressions of first-day returns and from least squares regressions of longer horizon initial returns. We also confirm an existing finding in the literature that dual class IPOs endure less underpricing than do single class firms.

Keywords: Dual class, initial public offerings (IPOs), price stabilization, censored distribution, mixed distributions

JEL Classification: C13, C16, C34, G24, G34

Suggested Citation

Zutter, Chad J. and Smart, Scott, Dual Class IPOs are Underpriced Less Severely. The Financial Review, Vol. 43, No. 1, December 2007. Available at SSRN: https://ssrn.com/abstract=1034981

Chad J. Zutter (Contact Author)

University of Pittsburgh - Finance Group ( email )

352 Mervis Hall, Katz GSOB
University of Pittsburgh
Pittsburgh, PA 15260
United States
412-648-2159 (Phone)
412-648-1693 (Fax)

HOME PAGE: http://www.pitt.edu/~czutter/

Scott B. Smart

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Kelley School of Business
Bloomington, IN 47405
United States
812-855-3401 (Phone)
812-855-5875 (Fax)

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